Regulatory Capital Matters

9 Months Ended

Sep. 30, 2014

Regulatory Capital Matters [Abstract]

Regulatory Capital Matters

(12) Regulatory Capital Matters

The amount of dividends payable to the parent company from the subsidiary bank is limited by various banking regulatory agencies.  Upon approval by regulatory authorities, the Bank may pay cash dividends to the parent company in excess of regulatory limitations.  Additionally, in the third quarter of 2009, the Company suspended the payment of dividends to common shareholders.  At September 30, 2014, the Company is subject to certain regulatory restrictions that preclude the declaration of or payment of any dividends to its common stockholders, without prior approval from the Federal Reserve Bank.

The Company is subject to various regulatory capital requirements administered by federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.  The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets.  The amounts and ratios as defined in regulations are presented hereafter.  Management believes, as of September 30, 2014, the Company meets all capital adequacy requirements to which it is subject under the regulatory framework for prompt corrective action.  In the opinion of management, there are no conditions or events since prior notification of capital adequacy from the regulators that have changed the institution’s category.

The following table summarizes regulatory capital information as of September 30, 2014 and December 31, 2013 on a consolidated basis and for the subsidiary, as defined.

											To Be Well Capitalized
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2014
Total Capital to Risk-Weighted Assets
Consolidated	$	132,973		17.76	%	$	59,902		8.00	%	NA			NA
Colony Bank		137,000		18.34			59,762		8.00		$	74,703		10.00	%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		123,608		16.51			29,951		4.00		NA			NA
Colony Bank		127,657		17.09			29,881		4.00			44,822		6.00
Tier 1 Capital to Average Assets
Consolidated		123,608		11.01			44,895		4.00		NA			NA
Colony Bank		127,657		11.40			44,799		4.00			55,999		5.00

											To Be Well Capitalized
						For Capital					Under Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2013
Total Capital to Risk-Weighted Assets
Consolidated	$	129,569		17.06	%	$	60,791		8.00	%	NA			NA
Colony Bank		131,024		17.29			60,638		8.00		$	75,797		10.00	%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		120,048		15.81			30,396		4.00		NA			NA
Colony Bank		121,521		16.03			30,319		4.00			45,478		6.00
Tier 1 Capital to Average Assets
Consolidated		120,048		10.57			45,419		4.00		NA			NA
Colony Bank		121,521		10.72			45,333		4.00			56,666		5.00

At September 30, 2014, the Bank continued to be subject to a board resolution (BR) which requires, among other things, that the Bank maintain minimum capital ratios at specified levels higher than those otherwise required by applicable regulations as follows:  Tier 1 capital to total average assets of 8% and total risk-based capital to total risk-weighted assets of 10% during the life of the BR.  Effective October 22, 2014, the Bank was released from the BR and any future reporting requirements of the BR.

Basel III Capital Rules

In July 2013, the Federal Reserve Board released its final rules which will implement the Basel III regulatory capital reforms from the Basel Committee on Banking Supervision and certain changes required by the Dodd-Frank Act.  These rules become effective January 1, 2015 for community banks and will increase both the quality and quantity of capital held by banks.  The final rule implements strict eligibility criteria for regulatory capital instruments and improves the methodology for calculating risk-weighted assets to enhance risk sensitivity.  Consistent with the international Basel framework, the final rule includes a new minimum ratio of common equity Tier I capital to risk-weighted assets of 4.5 percent and a common equity Tier I capital conservation buffer of 2.5 percent of risk-weighted assets.  The conservation buffer will be phased in from 2016 through 2019.  In addition, the final rule raises the minimum ratio of Tier I capital to risk-weighted assets from 4 percent to 6 percent and includes a minimum leverage ratio of 4 percent for all banking organizations.